In the area of personal financial transactions, there are occasions when individuals have an acute need to send or receive cash quickly by rapidly transferring money from one location to another distant location. These situations range from individuals who want to provide funds to their dependents who are away from home to business travellers who require convenient access to funds in remote locations. Accordingly, the ability to easily and conveniently “wire” money to a remote location is extremely desirable for these individuals.
However, wire transfer of funds is a banking function which is not generally available to the general public. Typically, bank wire transfers cover very large amounts of money and are only suited for business transactions. Consequently, rather than going to a bank to wire transfer money, most individuals commonly wire money through other companies such as Western Union or through the American Express Company. Wire transfer costs for consumer-related transactions at these organizations or related banks are relatively high and there are significant transfer processing time delays. For example, the cost of using current “wire” transfer services to transfer funds internationally can be as high as $80 U.S. and can take as long as 3-4 business days.
Typically, to send money through a commercial “wire” transfer organization, a customer (hereinafter referred to as “sender”) attends at an agent location and presents cash, cashier's check or a deposit from a recognized credit card in the amount of the funds to be transferred plus a service fee. The sender gives the agent the name of the person to whom the money is to be sent, and is issued a receipt. The agent then registers the transaction in the computerized system which allows the transferee (hereinafter referred to as “recipient”) to pick up the funds by physically attending at an agent location and providing proper identification (valid driver's license or military ID). Another option for money transfer with commercially available is for a sender to call a toll-free telephone number and provide the answering agent the above-noted information. The funds to be transferred, together with an increased services fee, are typically charged to the sender's credit card as a cash advance.
There are a number of drawbacks to the money transfer processes described above. A recipient must find an agent location which is open, which can be difficult to do during non-business hours and which carries sufficient cash to complete the transaction. If the agent selected by the recipient does not have enough cash, the agent will offer to give the recipient some of the cash and a check for the remainder. Often this requires additional work on the part of the recipient to find some place that will cash the check. Also, the privacy of both sender and recipient is compromised because the transaction is dependent on sales agent interaction. In many instances, people prefer not to let others at a currency exchange or bank have any knowledge of their personal financial affairs and would prefer to maintain as much anonymity as possible during the course of the transaction. Finally, delays may occur as a result of agent transposition or typographical errors. Moreover, such a system is very labour-intensive and costly to operate in part due to the potential for employee theft of currency.
In an effort to overcome some of these disadvantages, electronic fund transfer systems have been developed to allow customers to easily transfer and receive funds between banking accounts. U.S. Pat. No. 5,175,416 issued on Dec. 29, 1992 to Mansvelt et al. discloses a method of transferring funds. A first “smart card” is linked to a first financial institution. The first smart card then debits an account held at the first financial institution and records a corresponding credit value in the first smart card. The first smart card is linked to a second, similar device so that the credit value in the first device is reduced and a corresponding credit value is recorded in the second device. The second device is then linked to a second financial institution and the credit value in the second device is reduced while a corresponding credit value is recorded in an account held at the second financial institution. The first and second devices each store at least a portion of a program which is run in a synchronized interactive manner between the first devices. While the recipient and sender in such a system does not have to be a direct customer of the particular bank, they do need to have a valid, identifiable account at another “linked” (or affiliated) bank. Using such fund transfer systems, a cardholder can wire money to a recipient's bank account anywhere within the banking system. The wire transfer automatically debits the sender's account and deposits the funds in the recipient's designated account.
Another recently developed electronic fund transfer technology relates to the Mondex™ system which allows a bank customer to transfer funds from a bank account to a financial card having a microcomputer chip that stores a cash value (i.e. a smart card). It is also possible to transfer cash value to and from these financial cards using a Mondex Wallet™ system. The system is intended to provide additional privacy than a credit card or debit card due to the fact that Mondex transactions are not reported centrally. However, users of the Mondex Wallet™ system require accounts with Mondex™ (i.e. it is a closed system). Also consumer protection groups have noted that the 16 digit PIN number that is associated with the card encodes the user's name, the name of the issuing institution and the assigned bank account. While this unique serial number identifier is used to establish “security” of transactions at the point-of-sale, it can also create an audit trail which can compromise the anonymity of the user's card.
Some of the disadvantages associated with these kinds of fund transfer systems relate to the fact that they are closed systems and require participants (i.e. sender and recipient) to have accounts with the organization or an affiliated organization. Moreover, a recipient still requires a card to get access to the transferred funds and the funds are transferred from account to account, rather than dispensing cash directly to the intended recipient. In many cases, a particular user will desire to transfer money to someone else (a child, for example) in a distant city where neither the user nor the child has an account, or in the case where the child in the distant city does not have an banking (ATM) card for that account. Also, in the case of a person who requires funds in an emergency situation, in such a case it is likely that the person is without means of transportation to get to the nearest wire transfer office and that they are not in possession of their identification papers (i.e. stolen).
Finally, business travellers generally require access to significant amounts of funds but do not wish to buy and carry travellers checks or large amounts of cash. Further, travellers cheques are sometimes troublesome to convert to cash and are not uniformly accepted by international vendors. The use of credit cards used abroad usually incurs relatively high transaction costs and often results in unfavourable currency conversion. Debit cards are of limited use globally due to lower rates of merchant acceptability. Even wire transfer are expensive, slow and still require the recipient to carry cash.
Accordingly, there is a need for a system and method for transferring funds which does not have the cost and processing time limitations that are commonly associated with traditional “wire” transfers, which offer business travellers a viable alternative to travellers cheques, credit/debit cards, and “wire” transfers, which will allow any person to instantly and electronically transfer currency to any other person even in the case where neither person has a preestablished financial account with the organization, and which will still take advantage of an existing ATM network.